Birla group to consolidate cement units?

30 December 2005

Close on the heels of the Aditya Birla Nuvo consolidation which gave Kumar Mangalam Birla an upfront 10 per cent increase in promoter’s holding in the company, the chairman of the Aditya Birla group is working on yet another mega consolidation (reports The Times of India).

This time, Kumar Mangalam is planning to bring all his cement companies under one umbrella and a unified brand. It is learnt that the group would first merge the smaller Shree Digvijay Cement Company with Grasim Industries, and later merge UltraTech Cement into Grasim.

The group had on Monday announced the merger of subsidiary Narmada Cement with UltraTech. The merger of all cement companies of the group would give Grasim a stronger balance sheet to take on the might of rivals like Holcim/ACC.

Industry sources say Birla wants to scale up the group’s capacity to 50Mt in a decade, which could give him control of close to 43 per cent of the existing 120Mt domestic cement market.

The dominant market share would give him control in determining cement prices against the rival Holcim-Gujarat Ambuja-ACC combine. A group spokesperson denied any move to merge UltraTech into flagship Grasim.